Share Dealing Discussion Area

sabretoothtigger

nominee is safe. the company manages the share holdings but does not own them afaik
Same for a unit trust fund, if the management company fails the trust can continue. This happened with Barings, its fund still operate

Dont buy ETN or ETC

bowlhead99

melbury wrote: »

When you buy through an online firm and they hold the shares for you, how much do they charge

Charges vary from one provider to another, from about £6 a trade at the very lowest no frills end to £13 or so with some of the big names.

Some of them will charge an inactivity fee to maintain your nominee account if you are not trading ; others will waive that if you have a high enough account balance or have other products with them.

If you are adding regularly, a lot of them (though not the absolute cheapest) will do a program where you set up a direct debit and they just charge you £1.50 to buy largecap stocks, but they will buy them in bulk on a particular day or two within the month, so you lose control of the execution price.

If you just want a no frills bargain basement online execution only service with no annual fee, one of the cheapest is www.x-o.co.uk which is a trading name of Jarvis. Thread about them here http://forums.moneysavingexpert.com/showthread.php?t=5003188 with lots of happy customers. It's a nominee only service and only £6 a trade; if you wanted to get your shares back into your own name in certificated form or transfer to another broker they charge you £15 per stock for the paperwork. This has to be cheaper than how you are currently trading paper shares. Also, you can put an ISA around it which you can't do with self-held paper.

Personally I use TD Direct for most of my ISA and unwrapped holdings, as they have more frills than x-o, which I value. There's a thread here: http://forums.moneysavingexpert.com/showthread.php?t=3153942 which goes through most of the big names focussing on what they charge for ISAs but they will all do non-ISA accounts

and, more importantly, are they safe? It is just so reassuring to have that bit of paper proving that you own them:)

Well, a share certificate is just a certification that at the time it was printed, your name was on the register of shareholders. The proof is your name on the actual register.

The bit of paper - which could easily be lost, stolen, burnt down - doesn't prove you own the shares any later than the minute it was printed; you might have sold them or pledged them to someone else and just not given up the certificate. Or been sent a new certificate by the company after a stock split or other action. In the UK we don't have the concept of issuing shares of a company in bearer form where the person physically carrying them from time to time is the owner with voting and dividend rights. So the piece of paper is in a sense, worthless.

In fact, it can be a big headache because as you may have already found - as well as high dealing costs to handle shipping all the paper around and maybe needing extra time to settle trades - if you lose it, a broker won't want to deal for you without an indemnity and maybe insurance to ensure you aren't trying to pull a fast one.

And the paper will tell you you own 1000 5p shares in Company A plc, when actually by now you own 100,000 shares of 0.1p in Company A plc plus 17,250 shares in Company B plc after some stock split and corporate event.

For all of these reasons, having an old piece of paper in your loft or safe deposit box is antiquated and to me it has negative value.

On the risk question, yes it is safe. The brokers are regulated, interact with you through secure online systems similar to what hundreds of millions of people around the world use for their online banking, and the amounts they hold as nominee are segregated from their own assets with an industrywide compensation scheme (same as your existing broker). Only a tiny fraction of people posting here are ever talking about dealing paper shares and this is a relatively popular investment community.

Last time I had to deal with paper shares (apart from some unlisted ones) was when helping sort out a late relative's estate which included a bunch of AIM shares accumulated over time. It was a pain in the as$ working out what certificate now represented what company and how many current shares, whether they were still really his, getting someone to deal them and so on. Other than that, the last last time I had any was from an IPO 10-15 years ago and after using an online broker to sell, I never went back to paper.

melbury

Cherokeebluesome wrote: »

When you buy shares via the internet they are held in a "nominee" account electronically in your name. You will receive dividends as and when and NO tax will be payable unless you are paying the higher rate of tax( 40% ). The problem with buying shares, especially when very small tranches of money eg: less than £1000 is the effect of transaction costs and stamp duty( if applicable) has on your holding. A £1000 purchase of a company's shares will incur a 2%-5% hit on the value of your holding. To put another way, your share holding needs to increase by 2%-5% to bring you back to where you started. The effect when your purchase is ONLY £50 is far greater than for a £1000 purchase. The variations in costs (2%-5% ) is due to whichever internet share dealing provider you use.

I always purchase in excess of £1000 worth of shares, but as I said, when you factor in the cost of buying in certificated form, it is very expensive.

melbury

bowlhead99 wrote: »

Charges vary from one provider to another, from about £6 a trade at the very lowest no frills end to £13 or so with some of the big names.

Some of them will charge an inactivity fee to maintain your nominee account if you are not trading ; others will waive that if you have a high enough account balance or have other products with them.

If you are adding regularly, a lot of them (though not the absolute cheapest) will do a program where you set up a direct debit and they just charge you £1.50 to buy largecap stocks, but they will buy them in bulk on a particular day or two within the month, so you lose control of the execution price.

If you just want a no frills bargain basement online execution only service with no annual fee, one of the cheapest is www.x-o.co.uk which is a trading name of Jarvis. Thread about them here http://forums.moneysavingexpert.com/showthread.php?t=5003188 with lots of happy customers. It's a nominee only service and only £6 a trade; if you wanted to get your shares back into your own name in certificated form or transfer to another broker they charge you £15 per stock for the paperwork. This has to be cheaper than how you are currently trading paper shares. Also, you can put an ISA around it which you can't do with self-held paper.

Personally I use TD Direct for most of my ISA and unwrapped holdings, as they have more frills than x-o, which I value. There's a thread here: http://forums.moneysavingexpert.com/showthread.php?t=3153942 which goes through most of the big names focussing on what they charge for ISAs but they will all do non-ISA accounts

Well, a share certificate is just a certification that at the time it was printed, your name was on the register of shareholders. The proof is your name on the actual register.

The bit of paper - which could easily be lost, stolen, burnt down - doesn't prove you own the shares any later than the minute it was printed; you might have sold them or pledged them to someone else and just not given up the certificate. Or been sent a new certificate by the company after a stock split or other action. In the UK we don't have the concept of issuing shares of a company in bearer form where the person physically carrying them from time to time is the owner with voting and dividend rights. So the piece of paper is in a sense, worthless.

In fact, it can be a big headache because as you may have already found - as well as high dealing costs to handle shipping all the paper around and maybe needing extra time to settle trades - if you lose it, a broker won't want to deal for you without an indemnity and maybe insurance to ensure you aren't trying to pull a fast one.

And the paper will tell you you own 1000 5p shares in Company A plc, when actually by now you own 100,000 shares of 0.1p in Company A plc plus 17,250 shares in Company B plc after some stock split and corporate event.

For all of these reasons, having an old piece of paper in your loft or safe deposit box is antiquated and to me it has negative value.

On the risk question, yes it is safe. The brokers are regulated, interact with you through secure online systems similar to what hundreds of millions of people around the world use for their online banking, and the amounts they hold as nominee are segregated from their own assets with an industrywide compensation scheme (same as your existing broker). Only a tiny fraction of people posting here are ever talking about dealing paper shares and this is a relatively popular investment community.

Last time I had to deal with paper shares (apart from some unlisted ones) was when helping sort out a late relative's estate which included a bunch of AIM shares accumulated over time. It was a pain in the as$ working out what certificate now represented what company and how many current shares, whether they were still really his, getting someone to deal them and so on. Other than that, the last last time I had any was from an IPO 10-15 years ago and after using an online broker to sell, I never went back to paper.

Wow, thank you so much for all of the information. Will read the links you post and not be so stupid about paper certificates in future:o

I suppose I was a bit concerned about incurring an ongoing annual fee, which would clock up to more than the initial cost of buying certificated shares.

bowlhead99

melbury wrote: »

I suppose I was a bit concerned about incurring an ongoing annual fee, which would clock up to more than the initial cost of buying certificated shares.

You would expect most of them to have some sort of annual fee, and many do, because you're getting an ongoing service, online access to administer your account whenever you like, and the tax compliance/ reporting if your account has ISA benefits. The ones that provide a fund platform alongside stockbroking generally need to charge you for that complexity too.

However, you'll see a variety of annual fee structures (flat fees or a percentage of assets or a combination) and there are definitely some with no annual fees if you're only holding shares and they are making a few pounds off you here and there when you buy or sell. Then the question just becomes, do you want to pay more for a flashier, more confidence-inducing website, more customer service, dealing apps for your smartphone, foreign markets, extended settlement, ability to buy the odd fund from time to time, etc.

You may well find that if you're not paying £20-40+ for paper certificate trading on every purchase (and, don't forget, on every sale), there's some spare money in your kitty for an annual fee anyway.

IanManc

melbury wrote: »

Wow, thank you so much for all of the information. Will read the links you post and not be so stupid about paper certificates in future:o


I don't think you're stupid about share certificates. You can do certificated dealing through Skipton or Yorkshire Building Society sharedealing services for a fee of 0.75%, with a minimum fee of £20. If you're planning to hold your shares for the long term, you're happy to manage your holdings yourself, you want to vote by proxy at AGMs and you might even attend a few, then having share certificates is a perfectly reasonable way to hold shares.

melbury

IanManc wrote: »

melbury wrote: »

Wow, thank you so much for all of the information. Will read the links you post and not be so stupid about paper certificates in future:o


I don't think you're stupid about share certificates. You can do certificated dealing through Skipton or Yorkshire Building Society sharedealing services for a fee of 0.75%, with a minimum fee of £20. If you're planning to hold your shares for the long term, you're happy to manage your holdings yourself, you want to vote by proxy at AGMs and you might even attend a few, then having share certificates is a perfectly reasonable way to hold shares.

Thanks, that's interesting.

Do you know if you can use Skipton or Yorkshire for sharedealing if you don't have any accounts with them?

IanManc

Yes you can. On the Yorkshire BS site you need to click on the "other services" tab, and then on "sharedealing" on the next screen; and on the Skipton BS site click on "investments" and then on "sharedealing" on the next screen.


There are then links to the Stocktrade website, which is a division of Brewin Dolphin, and on there you can open a "certificated trading account" online. You can choose whether to have a deposit account, otherwise you pay for your purchases by debit card on the phone when you deal.


The dealing is done by phone. I've found that the dealers always answer the phones quickly when you call. It takes about ten days for certificates to arrive by recorded delivery if you're buying, but whether you're buying or selling the contract notes usually arrive in the post the next day.


If you're selling they send you the form to fill in, and suggest that you use Royal Mail Special Delivery to send them the certificates. Because of the longer timescale to turn around the paperwork the money for sales gets paid into your nominated bank account after ten days, which is normal for certificated sales.


I've used them a lot, and I've always found the service very good.

sabretoothtigger

Monday July 28 

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bowlhead99

IanManc wrote: »

I don't think you're stupid about share certificates. You can do certificated dealing through Skipton or Yorkshire Building Society sharedealing services for a fee of 0.75%, with a minimum fee of £20. If you're planning to hold your shares for the long term, you're happy to manage your holdings yourself, you want to vote by proxy at AGMs and you might even attend a few, then having share certificates is a perfectly reasonable way to hold shares.

It's still pretty expensive though, because even if you're holding for 5 years plus before selling, you are still going to get hit with the buy charge and the sell charge, which at 0.75% would be 1.5% of the share value for the round trip. And as the commissions are calculated on each leg separately, this could be £150 to buy £20k of stock and then £225-£300 to sell when it hits £30-40k. Compared to a tenner or so each way via a nominee.

As your intention is that your holdings go up in value faster than inflation, your exit charge on a percentage method is probably going to be relatively worse than somewhere that charges flat fees on the nominee account and just increases their prices from time to time. Obviously if you're only dealing in small values on each trade, the prices don't scale so badly, but if you did 2 x £1000 trades you would be paying their minimum fee of £20 for each of them instead of the percentage-based method, so this is still two or three times what the more competitive nominee accounts charge.

The 'being able to vote at AGMs' is a bit of a red herring because the provider of the nominee account is literally just holding shares in his name on your behalf, he is not holding them for his own benefit.

Most nominee providers worth their salt will pass on the voting documentation to you if you request, and can also arrange for you to participate in Scrip schemes each time the opportunity comes up, if you request it far enough ahead of the deadline. Some of the bare-bones cheapest outfits like X-O that I mentioned earlier will have to charge you an admin fee to arrange for you to physically attend a shareholder's meeting, but as you might only be paying £6 to buy and £6 to sell and no other admin fee along the way, you can probably afford to do this quite a lot, if your holding is sizeable and actually meaningful enough to you that you want to attend the AGMs.

If you want to hold paper and deal direct with the company's registrar rather than a middleman, it is a perfectly valid approach that has worked for decades, but the time to settle trades and the sheer cost of it (and lack of tax wrapper) is generally what puts people off from still doing it in the 21st century.

If you're sticking with paper the preferred pricing for YBS customers mentioned by IanManc is one of the cheaper for certificated dealing - e.g. if you go to Stocktrade direct, without the "/ybs" in the web address, their commission is 1% with £25 minimum, and other banks' paper dealing services - e.g. Halifax - are even higher than that.

My main broker TD Direct charges their normal online price plus a flat £50 to deal with certificates - which is quite a chunk of cash given their nominee service is pretty comprehensive and they'll handle voting, corporate actions, scrips, perks and so on without extra fees.